estimating tourism impact using multipliers · 2019. 4. 27. · business enabling services and...
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By Mohammad Muaz Jalil Mujaddid Mohsin Syeda Samira Saif February, 2018
Estimating Tourism Impact Using Multipliers
Funded by DFAT and managed by the Palladium Group
Started in Fiji in 2011 and expanded to 4 other economies
“Market Systems” approach to facilitate private sector development.
Who we are
Fiji
Pakistan
Sri Lanka
Timor-Leste
Papua New Guinea
Business Acceleration and
Expansion
Business Enabling Services and Infrastructure
Exports Tourism
18%
63%
More tourists to more parts of Fiji
Mo
re “Fijian” P
rod
ucts,
Activities &
Pro
du
ce For To
urists
Uses of multiplier
Design portfolio
Select/ prioritise destinations to work with in TOURISM
Identify partnerships that trigger the multiplier
Identify partnerships that can maximise the impact of the multiplier.
Measure impact
To measure the impact of additional tourists and/or increase in tourist spending on employment and income in different tourist destinations in Fiji.
Triangulate impact of partnerships designed to capture more of the tourist dollar in country
Bridge gap between impact of partnerships and systemic change in TOURISM
Influence stakeholders
To clarify ROI of TOURISM partnerships to internal audience
To communicate to donors on the impact of tourism
• To influence public sector agencies and ministries relevant to TOURISM
• To prime private sector for investment opportunities in TOURISM
Establish attribution
Update multiplier regularly
Must have strong attribution measures in place in order to claim any benefits from multipliers
Multiplier is not static, and requires regular updating to reflect change in sector dynamics Best done for each type of tourist, tourism, and destination
Ensuring Accuracy
Background to the Multiplier Study
The study was conducted in 2017 for Market Development Facility (MDF) Fiji, a multi-country MSD project funded by Australian Aid.
To design & implement a study to develop a local tourism multiplier :
To measure the impact of additional tourists and/or increase in tourist spending on employment and income in different tourist destinations in Fiji.
Theory of Change for employment effect
Systemic Intervention
Market System
Change
Improve
competitiveness
Employment and
income
Input
Impact
Outcome
Outputs
Partner with DMOs and HORETAs to develop
tourism products and promote new destinations
Increase tourism spending creates local income and employment multiplier
Increased number of
tourists traveling to Fiji
and new tourist
destinations
Increased tourist
spending in location
Facilitate integration with
supporting industries
Hotel and restaurants
increase purchasing of
local agriculture
Farmers experience
increase demand for their
produce
Tourism related actors
offer new products
DMOs are able to
promote new tourism
destination
Scope of study Direct Spending by Tourist
Direct Income Effect (Increase Tourist Enteprise Turnover)
Indirect Income Effect (Increase Enteprise Turnover of
suppliers of tourism sector)
Direct Employment Effect (Full time and Part Time in tourism
sector)
Indirect Employment Effect (Employment created in supplier
industries)
Direct and Indirect Impact : Type I
Induced Impact (Spending from wage income)
Total Tourism Impact (Direct , Indirect and Induced) : Type II
• Value of Additional Market transactions (Direct), which measures additional revenue generated from increased tourism spending, i.e. a measure of MDF’s business partner (DMO) and its target market (tourists). This is the direct tourism demand.
• Indirect output multiplier, measures the impact of each additional one dollar spending on tourism products (direct tourism demand such as hotel, activities etc. where tourist directly pay) on output in all industries, such as farming enterprises supplying to hotels or activity providers hired by resorts etc
• Employment Effect, measures the Direct FTE created primarily in the accommodation sector and indirect impact on the overall economy (when plausible)
Scope of study
Research Design
Lite
ratu
re r
evie
w a
nd
me
ta-
anal
ysis
>> Use IVS data to
develop estimate for
location specific tourism
spending
>> Develop per capita
/visitor spending
pattern estimates for
key locations
>> Collate secondary
data on employment
and room nights
In-d
ep
th in
terv
iew
s
>> Undertake in-depth
interviews with key
DMO stakeholders in
Raki Raki and Savusavu
>> Validate findings
from secondary data
and triangulate with
primary data findings
>> Develop ratio
(multiplier, efficiency
factor)
An
alys
is a
nd
Re
po
rt
>> Use method and data
triangulation to
estimate : Output and
employment multiplier
>> Strategic implications
of targeting outer
destinations
>> How multiplier can
be used for business
case analysis and MRM
tasks
Stylized Scenario Analysis Rakiraki Savusavu Total
Number of Additional Tourists
(a) 1000 1000 2000
Average Stay (b) 7 7
Average Spending per
tourist/day (c) $226 $282
Total Spending (a x b x c) $ 1,582,000 $1,974,000 $3,556,000
Deduct Tax (25%) $395,500 $ 493,500 $ 889,000
Direct Tourism Demand or Value
of Additional Market
transactions (e) $1,186,500 $1,480,500 $2,667,000
Output Multiplier (f) 1.35 1.35
Total Tourism Impact (Direct+
Indirect, e x f) $1,601,775 $1,998,675 $ 3,600,450
Stylized Scenario Analysis
Elasticity Method - I Rakiraki Savusavu Total
Number of Additional Tourists (a) 1000 1000 2000
Average Stay (b) 7 7
Tourist Nights (a x b) 7000 7000
FTE per Tourist Per night (c) 0.004 0.003
Total Direct Employment (FTE) - [(a xb) x c] 28 22 50
Employment Multiplier 1.20 1.20
Total Employment Impact (Direct + Indirect) 33 27 60
Strategic Implications
D
R
S
Denarau (242,000 tourists)
Vanua Levu (20,800 tourists)
Sun Coast (7,000 tourists)
Leakage
Poverty Incidence
Alternative Pathway
Strategy backward linkage
Things to keep in mind! 1. Multiplier are context specific, you cannot use one multiplier everywhere!
2. Think about labour dynamics – Fixed Term contract or hourly wage?
3. If you do want to use an existing multipliers then understand/ analyse/ develop /adjust
4. Triangulate - combining field and stats, never only one of them
5. Multipliers don't replace assessments, you need them to develop multipliers
6. Simplify where it makes sense (realistic assumptions)
7. Devil in the detail (like mean/median)
8. Focus on key employment changes, not trying to assess all possible multiplier impact
9. Being conservative in all steps
Thank You
Additional Material : TOR of the MDF Study STEP DELIVERABLE DAYS
Step 1: Preliminary Briefing/Meeting N/A
Due: 22 February 2017
+/- 4 days
Step 2: Desk Review of Key Documents
Step 3: Development of Research Plan
- Review of MDF proposed Table of Contents for Report
- Design of Research Plan and Tools, including Sampling Strategy, Interview Guide &
Field Plan
Research Plan submitted to MDF
Due: 25 February 2017
+/- 2 days
Step 4: Research Plan finalized
- Incorporation of MDF feedback
Research Plan finalized
Due: 29 February 2017
+/- 1 day
Step 5: Training of MDF Staff
- Technical training delivered to MDF Staff on Research Tool, Sampling Strategy,
Interview Guide and Field Plan
MDF Staff Training Delivered and
Interview Plan/Schedule finalized
Due: 04 March 2017
+/- 2 day
Step 6: Discussion and finalization of interview schedule
Step 7: Field Work
- Interviews conducted by MDF Staff
- Scheduled debriefs & guidance provided to MDF survey Teams during field work
Survey Data collected, cleaned &
collated
Due: 25 March 2017
+/- 5 days
Step 8: Analysis & Discussion Draft Report prepared
Due: 01 April 2017
+/- 3 days
Step 9: Report Preparation Final Report submitted to MDF
Due: 30 April 2017
+/- 5 days
International travel to Fiji N/A
+/- 2 days
Total 24 days
Descriptive Stats
Vanua Levu
(Savusavu)
Suncoast
(Rakiraki)
Median Length of Stay (days) 7 7
Room Density (# of
visitors/room)
2.75 2.2
Avg. Spending per tourist per
day (FJD/day/tourist)
$282 100% $226 100%
Hotel $245 87% $194 86%
Retail $10 3% $10 4%
Activities $15 5% $ 7 3%
Transport $ 3 1% $ 5 2%
Non-hotel F&B $ 7 2% $ 5 2%
Others $ 3 1% $ 4 2%
Analysis – Expenditure Method (Employment)
Expenditure Method Rakiraki Savusavu Total
Number of Additional Tourists (a) 1000 1000 2000
Average Stay (b) 7 7
Labor Cost per Tourist per night (c) 24 36
Total Labor Cost (a x b x c)
(f) $169,597 $254,129 $423,726
Wage Rate (FJD/hr)
(g) $4 $4
Number of hr (f/g) 47,440 72,608
Total Direct Employment (FTE) 25 38 63
Employment Multiplier 1.20 1.20
Total Employment Impact (Direct + Indirect) 30 45 75
Analysis – Elasticity Method (Employment)
Elasticity Method – II Rakiraki Savusavu Total
Number of Additional Tourists (a) 1000 1000 2000
Room Density (f) 2.2 2.75
Room Nights (a x b)/ f
(v) 3,182 2,545 5727
Total number of rooms nights (d) – Fiji 2,008,029
Total employment (e) - Fiji 11,816
Employment /room night (e/d) 0.0059
Efficiency factor 0.0077
Job to FTE Factor 1.15 1.14
Adjusted room nights to FTE factor (w) 0.0088 0.0087
Total Direct Employment (FTE) - (v x w) 28 22 50
Employment Multiplier 1.20 1.20
Total Employment Impact (Direct + Indirect) 34 27 60
Business Case - Example
Potential Impact of
Intervention
Scenario 1 Scenario 2 Comments
500 tourist stay
additional 2 nights
100 new tourists stay
for 7 nights
Number of tourist x
Number of days x
Revenue per tourist
per night Ad
dit
ion
al
Re
ven
ue
Year 1 $128,738 $90,117
Year 2 (50% return) $64,369 $45,058
Total Revenue $193,107 $135,175
ROI (Revenue) 193% 135%
Ad
dit
ion
al
Pro
fit
Year 1 $38,577 $27,004 Number of tourist x
Number of days x
Profit per tourist per
night
Year 2 $19,288 $13,502
Total Profit $57,865 $40,506
ROI (Profit) 58% 41%
FTE
Effe
ct
Total Tourist Nights 1000 700 Tourists x Nights
FTE per Tourist Per night 0.004 0.004
FTE (Direct) 4 3
MDF can also use this
info to justify
investment
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